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2015 (2) TMI 940 - ITAT BANGALOREDeduction u/s. 80IB(10) denied - According to the AO, development of the land is carried out by the sister company and not by the assessee - CIT(A) directed the AO to allow deduction u/s. 80IB(10) on a sum of ₹ 1,15,18,769 - Held that:- The entire profit earned by a developer was part and parcel of the over all profits derived from the housing project. We are, therefore, of the considered view that the exclusion of the profit on the sale of land on a sole ground that the assessee had shown the profits separately and the same would not relate to the assessee was misconceived and, thus, exclusion of the profit on sale of land was rather unjustified. - Decided in favour of assessee. Deduction allowed u/s. 80IB(10) of the Act by the CIT(A) viz., a sum of ₹ 3,50,92,256 - AO was of the view that assessee allocated COH expenses in such a way that less COH is shown in projects eligible for deduction u/s. 80IB(10) and more expenses are shown in the projects not eligible for deduction u/s. 80IB(10) of the Act. This, according to the AO, would reduce the total income in respect of profits of the assessee derived from projects which are not eligible for deduction u/s. 80IB(10) - Held that:- We are of the view that the order of CIT(Appeals) does not call for any interference. As rightly observed by him, in para 4.10 of the order of assessment, the AO has given no basis for allocating COH at 4% as against 3.27% adopted by the assessee. The AO’s conclusion is that allocation of COH at 3.27% is very low compared to the turnover of assessee. He has also given no basis for adopting 4%. As rightly observed by the CIT(Appeals), the AO has proceeded on surmises that assessee was increasing the profits of 80IB(10) units and decreasing the profits of non-80IB units to gain tax advantage. There is no basis whatsoever for this assumption of the AO. There is no dispute also that allocation of COH based on turnover will result in distortion of profits of 80IB(10) units and non-80IB(10) units. - Decided in favour of assessee. Computation of book profits u/s. 115JB - whether amount of expenditure relatable to any income to which section 10 applies, should be added to the profit as per the P&L account? - Held that:- In the issue of reducing/excluding the share of profits from the profit as per the P&L account, in view of clause (ii) to Expanation (1) to section 115JB(2) of the Act, viz., the amount of income to which any of the provisions of section 10, we are of the opinion that the contentions put forth by the assessee that it is not fair to deny the Assessee a relief purely on technicalities, when otherwise, the Assessee was entitled to the same.are acceptable. In this regard, we are also of the view that decision rendered by the Bangalore Bench of the Tribunal n the case of Sri Lakhan Singh v. ACIT, [2013 (2) TMI 319 - ITAT BANGALORE] referred to by the ld. counsel for the assessee clearly supports the stand taken by the assessee. - Decided in favour of assessee. Whether Sec. 14A of the Act read with Rule 8D of the rules can be imported into the provisions of clause (f) to Explanation (1) to section 115JB? - Held that:- There is no difference between the expression "expenditure relatable" and the expression "expenditure incurred by the Assessee in relation to". Both the expressions mean that whatever expenditure are incurred to earn income which does not form part of the total income under the Act, both direct and indirect expenditure, have to be disallowed. There is no basis for the argument u/s. 115JB of the Act, it is only direct expenses that are contemplated as capable of being added to the profits as per P&L account under clause (f) to Expln.1 below Sec.115JB(2) of the Act. The quantum of expenditure disallowed by the AO by invoking the provisions of Sec.14A of the Act while computing total income under the normal provisions of the Act has not been challenged by the Assessee and the said disallowance has been accepted by the Assessee. In such circumstances, we do not see any reason why the same disallowance cannot be adopted while arriving at the book profits u/s.115JB (2) of the Act read with Explanation 1(f) thereto. In our view the CIT(A) has fallen into an error in coming to a conclusion contrary. - Decided in favour of revenue.
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